Double Taxation Relief" (Taxes on Income) (Australia)

L.N. 41 or 1985

INCOM.E TAX ACT, 1948

(ACT NO . LIV OF 1948)

Double Taxation Relief" (Taxes on Income) (Australia)

Order. 1985

IN exercise of the powers conferred by section 68A of the lncomc

Tax Act. 1948, thc Deputy Prime Minister and Minister of Finlmcc and

C ustoms has made the following o rd er:-

I . This order may be cited as the Do uble Taxation Relief (Taxes

on Income ) ( Australia) Order. 1985.

It is hereby declared -

Dan l-ordni j ista' jisscjjah I-Ordni ta' 1-1985 dwar Hclsien minn

Taua Doppja (Taxxi fuq I-Income) (AwstraJja).

(a) that the arrangements speci fi ed in the Agreement set out

in the Schedu le to this Order have been made with the Government

of Australia with a view to affording relief from double taxation in

relation to the followi ng taxes imposed by the laws of Aust ralia

the Australia n income tax. including the additional l ax

upon the undistriblued amount of the distributable income of a

private company;

(b)

that it is expedient that those arrangements should have

effect.

SC H E D U LE

AG REM ENT BEl'NEEN

MA LTA A ND A USTRALIA FOR T H E AVOI DANCEOFDOU BLE TAXATION

AND

T HE PREVENTION OF FISCAL E VASIO N W ITH RES PECT

TO TA XES ON INCOME

Ma lta and Aust ralia desiring to conclude an Agreement for the avoidance of

doub le taxation and the prcvention of fiscal evasion with respect to taxes on income.

have agrecd ilS follows

CHAPTER 1

Scope orthc Agreement

A RTICLE I

Persona! Scope

This Agreement shall apply to persons who art: reside nt, of one or both o f the

Contracting States .

ARTICL E 2

lbc existing ta)(e~ to .... hich this Agrcenu: nl shall apply are:-

(1 )

(a )

in Autralia

Ihe Australian income lax, including Ihe additional lax upon the undistri-

bu ted amoun t of the di stributable income of a private C01l1P~lIy

in Mlllta

(b)

the income tax. including prepaymcnlS o f tax ,",' h.:: lhc T made by deduction al

sourc.! or otherwise.

(2) This Agreement shall also apply to any id entical or substantially simila r taxa;

which arc imposed by either Con1Tacting State after the dale of signature of this

Agreement in addition to. or in place of. Ihe c:x isitng taxes. As soon as possible after the

cnd of each ,alendar year. Ill.: competent authority of each Con tracting Slale shall

notify the compe te nt au thority o f the other Contract; ng State of any subslanlial cha nges

which have been made in the laws of his State relating to the taxes to which this

A greement applies.

CHAPTER 11

Definitions

A RT[ CLE)

GfIJfral Defj,ritiOlls

J n this Agreement. unless t he con text o thcr,\'ise requires

(I )

(a) the te rm .. Australia" means the Commo nwealth of Austral ia and. when

used in a geographical se nse. includes

(i) the Territory of Norfolk Island

(i il the Territory of Chris tmas I s[~nd

(iii) the Territ oryof Cocos (Keeli ng) Islands

(iv) Ihe Terri to ry of Ashmore and Cartier Islands

(vi the Coral Sea Islands Territory: and

(vi) any area adjacent to the territo rial limits of Austnllia or of th e said

Te rritories in respeet of which tlu.:rc is for the time being in force.

co nsistently with illlernationallaw. a law of Aust ralia or of a State or

pan of Australia o r of a Territory aforesa id dealing wi th the exploitation

of any of the nat ural resources of the sea-bed a nd subsoil of the conti·

Re ntal shelf

(b) the term "Malta" means the Republic of :\'Ia[ta and. whe n used in 11

geographical sense. me ans th e Island of Mal1a. the Island of Go~o and the othe r

islandsof the Ma ltese archipelago. incl udin g th e te rritorial waters thereof. and any

area ou tside th e territorial sea of Malla " ·hich. in aeC(:'rdancc wi th international

law. has bee n or may hcr.::after be designated. l!OdeT the law of Malt a l-onccming

the ~'On t inenta l s helf. as an area within which the rights of Malla "ith rc~pcet to Ihe

sea·bed a nd ,ulNlil a nd thei r natuml resources ma~ be exerel!oC .. L

( c) the terms " ContractingState ". "l)ne of the ContnK1in~ Stall')," and

"other Contracting Statc" IIh::an A u~tT31iu Of Malta. a~ I h~ C0111 eX I req uIre s

B H7

(d) the term "person" includes an individual. a company and any other body

of persons

(e) the term "company" means any body corporate or any entity which is

treated as a company or body corporate for tax p urposes

(f) the terms "enterprise of one oft he Contracting States" and "enterprise of

the OIher Contracting State" mean an e nterprise carried on by a resident of

Australia oran enterprise carried on by a res ident of Malt a. as the context requires

(g) the term "international traffic" means any transpon by a ship or aircraft

except where the ship or aircraft is operated solcly between places within a

Contracting Slate

(h) the term "tax" means Australian tax or Malta tax. as the conleXI re-

qUires

(i) the term "Australian lax" mellns tax imposed by Australia. being tax to

which this Agreement applies by virtue of Article 2

(j) the lerm " Malta 11Ix" means lax imposed by Malta. being tax towhich this

Agreement applies by vin uc of Anicle 2

( k) the term " competent authority" means. in the case of Australia. the

Commissioner of Taxation of his authorised representative. and in the case of

Malta. the Minister responsible for finance or his authorised representative.

(2) In this Agreement. the terms " Australian tax" and " Malta lax" do not include

any penalty or interest imposed under the law of e ither Contracting State relating to the

taxes to which th is Agree ment applies by virtue of Anicle 2.

(3) In the application of this Agreement by a COIltracling State. any term not

defined in this Agreement sha ll. un less the context ot herw ise requires. have the mean-

ing which it has under the lawsofl hat State relating to the taxes to which this Agreement

ARllCLE4

Residellc£

For Ihe purposes of this Agreement. a person is a resident of onc of the

Contracting Sla tes

(a) in the case of Australia. subject to the provisions of paragraph (2) . if the

person is a resident of Australia for the purposes of Australian lax: and

(b) in the case of Malta. if the person is liable to tax therein by reason of his

domicile , res idence. place of management or any other criterion of a similar

nature. A person is not a resident of Ma lla if he is liable 10 tax in Malta in respect

only of income from sources therein.

(2) In relation to income from sources in Malta. 1I person who is -subject 10

Australian tax on income which is from sources in Australia shall nol be trealed as a

reside nt of Australia unless the inrome from SOllrceS in Malta is subject to Australian tax

or. if that income is exe mpt from Australian tax, il is so exempt solt:1y bl:<.:lIU!oI: it is

subject to Malta tax.

(3) Where by reason of the preceding provisions of this Article an individual is a

resident of bolh Contracling States. then his status shall be determined in accordance

with the following rules

(a) he shall be deemed to be ~ resident MJIe1y of Ihe Con tract ing Stale in which he

has a permanent home available to him;

(b) if he has a permanent home available to him in bOlh Contracti ng Stales.

or if he does nOI have a pcrmanelll home available 10 him in eilherofthem. he shall

be deemed 10 be a resident solely of the Contracting State with which his pcrs.ona!

and economic relations are the closer.

(4) In dele rmining for the purposes of paragraph (3) the Contracting State with

which an individual's personal and economic relations are the close r. the matters to

which regard may be had sha ll include the citizenship of the individual.

(5) Where by reason of the provisions of paragraph (I). a person ot her than an

individual is a resident of both Contracting Slates. then il shall be deemed to be a

resident solely of the Contracting State in which ilS place of effective management is

situated.

ARTIC LE 5

Pem1(Jflem EsI<lblisllr/zem

(I) For the purposes of this Agreement. the term "permanent establishment"·. in

relation to an enterprise. mea ns a fixed place of business through which the business of

the enterprise is wholly or partly carried on.

(2)

The term "pcrmanent establishment" shall include especially

(a)

a place of management

Ibl a branch;

(cl an uffice

(d) a factory;

(e) a workshop

(I) a mine. an oit or gas well. a quarry or any other place of e~lraCl ion of

natura l resou rces

(g) an agricultural. pastoral or forestry property;

(h) a buildmg site or construction . installation or assembly project which

exists for more than 183 days in any twelvc·month period.

(3) An enterprise shall not be deemed to have a permanent establishment merely

by re ason of

(a) the use of facilities solely for the purpose 01 storage. displayordeliveryof

goods or me rchandise belonging 10 the enterprise

(b) the maintenance of a stock of goods or merchandise bcJonging to the

en tcrprise solely for the purpose of storage. display or delivcry;

(c) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of processing by another en terprise

(d) thl: maintenance o f a fixed place of business solely for the purJXlse of

pu rchasing goods or merchandise. or for collecting inform alion. for the enterpriSt

(e) the maintenance of a fixed place of business solely for the purpose of

activi ties which have a preparatory or auxiliary character for the enterprise. such as

ad\'erlisi ng or scienti fic reS<.'arch.

(4) An enterprise shall be deemed tu have a r<: rmanent eSlablishmt:nt in one of

the Contracting: St~tes and to carry on business through that permanent establishment

(a) it carries on supervisory activities in that State for more than IS) days in

any twelve-month period in connectio n with a building si te, or a construction,

installation or assembly project which is being undertaken in that State;

(b) there is being used in that Sta te by. for or under contract with the

enterprise substantial equipment including, but not limited to. an installa tion.

drilling rig or ship used for. or in activities connected with. the exploration for or

exploitation of natum l resources; or

(c) it carries on supervisory activities in that State in connection with the use

of equipment referred to in sub-paragraph (b).

(5) A person acting in one of the Contracting States on behah of an enterprise of

the other Contracting State - other than an agent of an independent status to whom

paragraph (6) applies - shall be deemed to be a pennanent establishment of that

enterprise in the first-mentioned State

(a) in respect of his activit ics in that hehal f. if hc hllS. altd habitually cxcrcises

in that State. an au thoriTY to conclude contracts on behalf of the enterprise. unless

his activities are limited to those mentioned in paragraph (3) and are such that. if

exercised through a fIXed place of business, would not make that fIXed place of

business a permanent establishment under the provisions of that paragraph; or

(b) if. in so acting. he manufactures or processes in that State for the

enterprise goods or merchandise belonging to the enterprise.

(6) An enterprise of one of the Contracting States shall not be deemed to have a

permanent establishment in the other Contracting State merely because it carries on

business in that other State through a broker, general commission agent or any other

agent of an independent status, where that person is acting in the ordi nary course of his

business as such a broker or agent.

(7) The fact that a company which is a resident of one of the Contracting States

eontrolsor is controlled by a company which is a resident of the other Contracting State.

or which carries on business in that other State (whether through a pennanent estab-

lishment or otherwise), shall nol of itself make either company a pennanent establish-

ment of the other.

(8) The principles set forth in th e preceding paragraphs of this Anicle sha ll be

applied in de termining for th e purposes of this Agreement whet her there is a pennanent

establishment ou tside bo th Contracting States. and whether an enterprise . not being

an enterprise of onc of the Contracting States, has a pennanent establishment in one of

the Contracting States.

C HAPT ER III

TAXATION OF INCOME

ARTICLE 6

Income from Real Property

(I) Incom e from real pro~rty may be taxed in the Co ntracting State in which the

real property is situa ted .

!rr th i~ Art icle . theknn " re:!1 prope rTy"

(2)

(a) In the case of Austlalia. has (he meaning which it has under the laws of

Australia. and shall also include

(i) a lease of land and any other interest in or over land. whctlicr

improved or not; and

(ii) a right to receive variable or rued payments as consideration for the

working of, or the right to work or to explore for. mineral deposits. oil or gas

wells, quarries or other places of extraction or exploitation of natural re-

sources; and

(b) in the case of Malta, means immovable property according 10 the laws of

Malta, and shall also include

(i) property accessory 10 immovable property

(ii) rights to which the provisions of the general law respecting landed

property apply;

(iii) usufruct of immovable property: and

( i\l) rights to vanable or fixed payments In respect of the operanon of

mi nL"'S or quarries or of the exploi tation of o r explora tion for any natural

resourccs.

Ships. boats and aircraft shall not be rcgarded as real property.

(3) A lease of land. any other interest in or over land and any right referred to in

any of the sub·paragraphsof paragraph (2) shall be regarded as situated where the land.

mineral de~its. oil or gas wells. quarrics or natural resources. as the case may be. are

situated or the e xploration may take place.

(4) The provisions of paragraph (I ) shall apply to income derived from the direct

usc , letting or use in any other foon of real propeny.

The provisions of paragraphs (I). (3) and (4) sha ll also apply to the income

(5)

from real property of an enterprisc and to income from real property used for the

performance of professional services.

ARTICLE 7

Business Profits

(I ) Th e profits of an enterprise of one of th e Contracting States shall be taxable

only in that State unless thc enterprise carries on business in thc othcr Contracting State

through a permancnt establishment situated therein. If the enterprise carries on busi·

ncss as aforcsaid. the profits of the enterprise may be ta xed in the other State but only so

much of them as is attributable to that permanent establishment.

(2) Subject to thc provisions of paragraph (3). where an enterprise of onc of thc

Contracting States carries on business in the other Contracting State through a peona·

ncnt estab lish ment si tuated therein . thcre shall in each Contracting State be attributed

to that pennanent estab lishment the profits which it might be expected to make if it were

a distinc t and separate entcrprise engaged in the same or similar activities under the

samc or similar conditions and dealing wholly indcpendently with thc enterprisc of

which it is a pennanent establishment or with other enterprises with which it deals.

(3) In the determination of the profits of a IlCrmanent establishment. there shall

be allowed as deductions expenses ofthc ent<,rp ri se. being expenses which arc incurred

for the purposl..""S of the pemlanent establishment (including excmtivc and general

administrative expenses so incurred) and whid would be deductible if the permanent

establishment were an independent enlry which paid those expem;es. whether incurred

in the Contracting State in which thc permanent establishment is situa ted or elsewhere.

"

J()I

(4) No profits shall be alfributcd 10 a permanent establishmcm by reason of the

mere purchase by that pcnnancrH C'itablishment o f goods or merchandise for the

enterprise _

(5) Nothing in this Article shall affect the application of any la"' of a Contracting

State relatin g to the determination of the lax liability of a person. including the

determination of such liability by the e xercise of a discretion or the making of an

estimate by the compt'\cnt authority of Ihat State in cases in which. fTom the in for-

mation available to the competen t authority of that Stale, it is not possible or not

practicable to ascertain the profits lu be amibuted 10 a permanent establishment.

prov ided that that la w shall be applied. so far as the information available 10 the

competent authoriTy permits. consistently with the principles of this Article.

(6) For the purposes of the preceding paragraphs of this Article. the profits to be

attributed to the permanent establishment shall be determined by the same method year

by year unles, there is good and sufficient reason to the contrary.

(7) Where profits include items of income which arc dealt with sepa ratciy in other

Articles of this Agreem e nt. then the provisions oftho<.e Articles shall not be affected by

the provisions of this Article.

(8) Nothing in this Article shall affect the operation of any law of a Contracting

State relating to taxation of profi ts from insurance with non-residents provided that if

the relevant law in force in e ither Contracting State at the date of signature of thiS

Agre emen t is varied (othelv .. ise than in minor respects l>O a~ not to affect its general

character) the Contracting States shall consult with each ot ller with a view to agreeing to

any amendment of this paragraph that may be appropriate.

ARTICL E 8

Shipping and Air Transpo r,

(I) Profits from the operation of ships or aircraft derived by a resident of onc of

the Contracting States sha ll be ta~able only in that State.

(2) Notwithstanding the provisions of paragraph (1). such profits may be ta~ed in

the other Contracting State where they are profits fro m operations o f ships or aircraft

confined solely to places in that other State.

(3) 'nle provisiuns of paragraphS (I) and (2) Shall apply in relation to the share of

the profits from the opera tion of ships or aircraft derived by a resident of onc o f the

Contracting States through participation in a jXlQI service. in a joint transport operating

organ i7.a1ion or in an i nlernational operati ng agency.

(4) For the purposes of this Artkic. profits derived from the carriage by ships or

aircraft of passengers. livestock . mail. goods or merchandise shipped in a COntracting

State for discharge al anuther place in Itnt State Shall be treated as profits frum

operations of ships or aircraft confined solely to places in that State.

(5) Notwithstanding the provisions of this Ar1icie. profits from the operation of

sh ips in intern ational traffic derived by J company which is a resident of Malt a may be

ta~ed in Australia lInlcss th e company provcs that sllch profits arc not relievcd from

ur

Mahll tax under the pro\'i~ions

the MeTl:h,lnt Shipping Act. 1973. or under any

identical or similar provision, . The fon:g.oing sentence. howe\'er. shall not apply if the

<:orTlJany proves tha t not more than ~ .' per cent of its capital is o " 'ned. di rectly or

indirectly hy pcr"'n~ who ;1 re n. >, residenl~ of ~lall n.

•

ARTICLE9

JUsQdat~d £ntt"pris~

(J) Where

(a) an enterprise of one of [he Con tracting Slates panicip<ltcs directly or

indirectly in the managcmcnt. co ntrol or capital of an enterprise of the other

Conlructin g State; or

(b) the same persons participate directly or indirectly in the m~magcmcnt.

control orcapitalof an enterprise of oncofthc Coolracting Slales and an enterprise

of the other Contracting Stale,

and in ei ther case conditions operate between the 11'0'0 cntcrpri~cs in their commercial

or financial relations which differ from those which might be expeCled 10 oper31e

bet\lo'~n independent enterprises dealing wholly independently \Io'ith onc anOlhcr. then

any prolils which . but for those conditions. might have been expected \0 accrue to on ...

of the enterprises. bm. by reason of those conditions. ha'"c nOl so accrued, may be

included in the profits of tha t enterprise an d taxed accordingly.

(2) Nothing in Ihis Article shall effect the applicatiOfJ of any law of a Contracting

Slate relating to Ihe detennination of th e tax liability of a person. including the

determination of >uch liability by tht;: exercise of a discretion or the m~king of an

estimute by the compete nt authority of that Swte in cases in which. from the infor·

malion ~1V~i b blc 10 the competent ~Ulhorily of that Slate. il is nOI possible or nOI

practicable 10 detennine the income to be attributed to an enterprise. provided that Ihal

law.shall be applied. so far as Ihe infonnation availabl~ 10 Ihe compett;:nl authority

permits. consistently with the principles of this Article.

(3) Where profits on which an enterprise of one of the Contracting StateS has

hcen charged to tll.\: in that State arc also included. bY"inue of par-tgraph (I) or(2). in the

profits of an enterprise of the ot her COIltr.lcting State and tll.\:ed accordingly. and the

profits so included are profilli which might ha"e been expected to have accrued to that

enterprise of the othe r State if the conditions ope rative between the en terprises had

been those which might have been expected to h~Lve operated between independent

enterprises dealing wholly independently with onc another. then the first ·mentioned

SllIte shall m~lke an appropriate adjustmen t to the amount of tax charged on those

profits in the first·mentioned State. In determining such an adjustment. due regard shall

be had to the other provisions of this Agreement in relation to the nature of the income

and for thi s purpose th e compete nt authorit ies of the Contracting States shall if

necessary const.J1t each other.

ARTICLE \0

DividtrldJ

(I) Dividends paid by a comp an)· which is a resident of one of the Contr:tcting

States for the purposes of its tax. being di vidends to which a resideRt of the other

Contracting State is beneficially enti tl ed. may be taxed in that State.

(2) Such dividends may be taxed in the Contr.tcting State of which th e <XImpany

paying th e dividends is a residen t for the purposes of its tax. and ae(:ording to the law of

that Stall:. but

(a)

in the case of tax charged by Australia

that lax shall not exceed 15 po::rcent of the gross amount of th e dividends

(b)

in Ihe ca1.e or la>; charged by Malta

(i) such tux 011 the gross amount of the dividcnd~ shall not exceed that

chargeable on Ihe profits out of which the dividends are paid;

where such dividends arc paid out of profit~ of a company which arc

(ii)

subject to tax at a reduced rate of tax under special provisions

designed 10 promote investments necessary for the eronomic deve-

lopme nt of Malta. the rate of Malta tax on the d ividends sha ll not

exceed suet-. rcdllccd ratc.

T he provisions of Ihis paragraph shall not affect the 13l!ulion of the company un the

profits out of which th e dividends arc paid.

(3) The tcnn "dividends" in th is Article means income from shares and other

income assimilated la income from shares by the taxation lawoftheContractingState of

which the company making the dimibution is a resident for the purposes of its tax.

(4) The provisions of paragraph (2) shall not 3pply if the person benefici311y

enti tled to the dividends. being 3 resident of onc of the Contracting States. C<ln;es on

business in the other Contr3cting St3 te of which the comp3ny paying th e dividend~ is a

resident. through a permanent establishment situated therein. or performs in that other

State independent personal scrvices from a fixed basc situated therein. a nd ttle holding

in respect of which the dividends are paid is effectively connected with such permanent

establishment or fixed base. In any such e3SC the provisions of Article 7 or Article 14, as

th e C3SC m3y be. shall apply.

(5) Dividends paid by a company which i.s a resident of one of the Contracting

St3tes. being dividends to which a person who is not a resident of the other Contracti ng

State is beneficially en titl ed. shall be exempt from tax in that o tb er State except insof3r

as the huld ing in respect of wbieh tbe dividends are paid is effectively eonne<:ted with a

permanent establishment or fixed base situated in that other State. Provided that this

pa ragraph shall not apply in rela tion 10 dividend s pa id by any company which is a

J"(!Sident of Aus tralia for the purf'O"CS of Australian ta~ and which i~ at<£) a resi dent of

Malta for the purposcsof Malta tax.

ARllC LE 1I

Inleresl

(1) llllerest arising in one of the Contracting States. being interest 10 which a

resident of the other Contracting State is beneficially entitled. may be taxed in that

other State.

(2) Such interest may be taxed in the Contmcting State in which it arises .• lIId

according to the law of that State . but the tax so charged shall nOl exceed 15 per cent of

the gross amount of the interest.

DJ The term ··int e re ~t"· in Ihi ~ Article includes interest from Gove rnment secu·

rities or from honds or debentures. whether or not secured hy mortgage and whether or

not carrying a right to participate in profits. and interest from any other form of

indebtedness as well as all other income assimilated to income from money len t by the

taxation law of the ContraCling State in which the income arises.

The provisions of paragraph (2) shall not apply if the pen;on beneficially

(4)

cmitled to the interest. being 3 resident of onc of the Contracting Stales. carrics Oil

business in (he other Contracting State. in which the illterest arises. thrOllbh a pcrma-

nent establishment situated there in, or performs in that other State independent

personal services from a filled base situated there in. and the indebtedness in respect of

which the interest is paid iseffectively connected with such pemanent establishment or

fixed base . In such a case . the provisions of Art icle 7 or Article 14. as the case may Ix: .

shall apply.

(5) Interest shall be deemed to arise in a Contracting State when the payer is that

State itself or a political subdivision or local authority of that State or a person who is a

resident of that State for the purposes of its tax. Where, however. the person paying the

interest . whether he is a resident of one of the Contracting States or not, has in one of

the Contracting Statesor outside both Contracting States a permanent establishment or

fixed base in connection with wh ich th e indebtedness on wh ich the interest is paid was

incurred, and such interest is borne by such permanentcstablishmentor fixed base . then

such interest shall be deemed to arise in the State in which the permanent establishment

orfillcd hltsc is situatcd.

(6) Where, owing to a special relationship between the payer and the person

beneficially entitl ed to the inte rest, or between both of th em and some other person, the

amount of the in terest paid, having regard to the indebtedness for which it is paid.

exceeds the amount which might have been expected to have been agreed upon by the

payer and the person so entitled in the absence of such relationship. the provisions of

this Art icle shall apply only to the last·mentioned amoun1.1n that case, the excess part

of the amount of the interest paid shall remain tallable according to the law of each

Contracting State. but subject to the other provisions of this Agreement.

ART ICLE 12

Roy~llies

(1) Royalties arising in one of the Contracting States. being royalties to which a

resident of the other Con tracting State is beneficially entitled. may be taxed in thal

other State .

(2) Such royalties may be taxed in the Contracting Slate in which they arise . and

according to the law of that State. but the tax so charged shall not exceed 10 per cent of

the gross amount of the royalties.

(3) The tem "ro)'alties" in this Article means payments or credits, whether

periodical or not. and howe\'e r described or computed. to the eXte nt to which they are

made as consideration for

(a) the usc of, or the right to use. any copyright. patent. design or model.

plan , sec ret formu la or process. trademark or other hke properly or right

(b) the use of. or the right to use, any industrial. commercial or scientific

equipment ;

(c) the supply of scientific, technical. industrial or commercial knowledge or

infomation

(d) the supply of any assistance that is ancillary and subsidiary to. and is

furnished as a means of enahling the application or enjoyment of. any sueh

propeny or right as is men ti oned in sub -paragrdph (a). any such equipment as is

ment ioned in sub-paragraph (b) or any such knowledge or information as is

mentioned in sub-paragraph (c)

(e)

the use of. or the right to use

(i) motion picture films

film~ or video tapes for use in cQ!Ulection with teie\ision:or

(ii)

(iii)

tape, for u .. e in cQ!Ulection with radio broadca>ting: o r

(t) total or pal'lial forbearance in respect of the me or .. upp lyof any property

or right refell"ed to in this paragmph.

(4) The provisions of paragraph (2) shall not apply if the perwn beneficially

entitled to the royalties. being a resident of onc of the Contracting States. carries on

business in the o ther Contracting State. in which the royalties arise. through a per·

manent establishment situated therein. or performs in that other State independent

personal services from a fIXed base situilted therein. and the property or right in respect

of which the royal ties a rc paid or credited is effectively connected "'1th such permanent

c.,tablishment or fixed base. In such a case. the pro\'isionsof Artic le 1 or Article 14. as

the case may be. shall ilpply.

(5) Royalties shall be deemed to arise in a Contracting State when the payer is

that State itself or a political subdi\1sion or local authority of that State or a pers.on who

is a resident of that State fonhc purposes of Its ta x. Where. however. the pers.on paying

the royalties. whether he is a resident of onc of the Contracting States o r not. has in onc

of the Contracting States or outside both Contracting States a pennanenl ~tablishment

or fixcd base in connection with which the liability to pay the royalties was incurred. and

the royalties are borne by the pennanent establishment or fixed base. then the royalties

shall be deemed to arise in the State in which the permanent establishment or fixed base

is situated.

(6) Wh ere. owing to a special relationship between the payer and the pers.on

beneficially entitled to the royalties. o r between both of them and some other pers.on.

the amount of the royalties paid or credited. having regard 10 what they arc paid or

credited for. exceeds the amount which might have been expected 10 have becn agreed

upon by the payer and the person so entitled in the absence of such relationship. the

provisions of this Article shall apply on ly to the last-mentioned amount.

In that case. the excess part of the amount of the royalties paid or credited shall

remain taxable according to the law of eilch Contracting State. bu t subject to the other

provisions of this Agreemcnt .

ARTICL E 13

Alienotion of ProPf'Tty

( 1) Income or gains from the aliemltion of real propert)' may be taxed in the

Contracting Stalc in which the real property is situated.

(2) Income or gains fro'll the alienation of shares or comparable interests in a

cumpany. the assets of which consist wholly or principally of real property. may bc taxed

in the Contracting State in which the assets or the principal asse ts of the company are

situated .

For fhe purpo .. e~ of thi .. A.l1icle

(3)

(a) fhe fenu ··I"eal propelt)" ha .. the same meaning rim! it ha .. in Article 6

and

(b) any lea~c. i.ntere,t or light l"efelTed to inany ~ub-paragraph of paragraph

(2) of that Artic le ,hall be regarded a~ .. imated where the land.minera.l depo .. its. oil

or gas well>. qumries Of nat\ll"al re>ource ... as fhe ca,e may be.are siUmted or the

explorntion lImy take place.

ARTICLE 14

IlIdependenr Person(ll Scnices

(I) Income derived by an individual who ~~ a resident of onc o f th e Contractin g

Sllltcs in respect of professional services o r o ther independent activities of a similar

ch aracte r shall be tax able only in that State. Howe\'c r. if such an individual

(a) has a fixed base regularly 3\'ai lable 10 him in the othe r Contracting State

for the purpose of performing his activities: or

(b) in a )'ear of income or in the yea r immediately preceding a year of

assessme nt. as the case may be, Slays in the o ther Contracting State for a period or

periods aggrega ting mOTC than 183 days for the purpose of performing his activities

0'

(c) derives. in a ycaro f income Of in the yea r immed;ately preceding a year of

assessme nt . as the case may be, from residents of the other Contracting Slate gross

remuneration exceeding tweh'e thou!klnd five hundred Austr"Iian dollars or its

equivalent in Malla pounds from performing his acti"ities in that Slale,

so much of the income de rived by him as is anribut able to acti"ities so performed may be

taxed in the othe r State,

(2) The Treasurer of Australia and the Minister responsible for finance in Malta

may agree in letters exchanged for the purpose to va ria tions in the amount specified in

sub-pa ragraph (c) of paragraph (I) and any variations so agreed shall have effect

according to the tenor of the letters.

(3) The term " professional services" includes services performed in the exercise

o f independent scientific, literary. arti5lic educational or teaching activities. as well as

in the exercise of independent activities of physicians. lawyers. engineers. architects.

dentists and accountants.

ARTICLE IS

Dependent Pe/'"SomJ/ Servicr;s

(I) Subject to the provisions of Articles 16. 18 and 19. salaries. wagcs and other

similar remuneration derived by an individual who is a resident of one of the Contract-

ing States in respect of an employmcnt shall be taxable only in tha t State unless the

em ployment is e1l"ereiscd in the other Contracting State. I f the employmen t is so

e1l"ercised. such rem un eration as is derived from that exercise may be tax ed in that other

Stale.

(2) Notwithstanding the provisions of paragraph (I). remuneration derived by an

individual who rsa resident of oneofthe ContraetingStatcs in respect of an employment

exercised in the other Contracting State shall be taxable only in the firs t-mentKmed

State if

(a) the recipient is prese nt in that other State for a pe riod or periods not

exceeding in the aggregate 1113 days tn the year of income or in the year immediate-

ly preceding the year of assessment. as the case may be. of that oil,er State; and

(b) the rCnlunl;!ration is paid by. or on behalf of. an employer who is not a

residen t of that other State: and

(c) the remunera tion is lIot deductibk: in detenninillg taxable profits of a

permallent establishment or a fixed oose which the employer has in tha t other

State: and

"

]()7

(d) the remuneration is, o r upon the application of this Artic le will be.

subject to lax in th e first-mentioned State.

(3) NOT withstanding the preceding pro~isions of this Artick. rcmunern ti on in

I cspeC! of an emp)oymcl11 exercised <Iooard a ship or ;Jircrah operated in international

traffic by a reside nt of o ne of th e COlll racting States may be taxed in tha t State.

ARTICLE 16

DireclOl'$' Fees

Director;' f~es and ~illlibr payments deriH,d by a re~ident of one of The Contnlcting

State, in hi" capacity as a member of the board of direct Ol .... or other comparable body

howcycr described.of a company which i~ a re,idcll[ ofthc other Contracting State lUay

be taxed in that other Slate.

ARTIC LE 17

Em erllliners

(I) Notw ithsta nd ing the provisions of A rticles 14 a nd 15. income deri ved by

en terta iners (such as th ea trical. motio n picture. radi o o r television artistes and musi·

cians and athletes from the ir pe rsonal activit ies ~s such may Ix: taxed in the Contract·

in g State in whieh these activities arc cxercised.

(2) Where income in resped of the perso nal activities of an entertainer as such

accrues not to th a t cntertainer bu t 10 anot her person. that income may, not withstanding

the proviSions of Anicles 7. 14 and 15 . be taxed in the Contracting Stale in whiCh the

activities of the entertain er are exercised.

A RT ICLE 18

Pensions and Annuiries

(1) Pensions (including government pensions) and annuit ies paid to a resident of

or,e of the Con tracting States shall be taxable only in tha t State.

(2) The term "annl.lity" mea ns a st<lted sum payable periodically at stated timl"S

during life or during 3 specified or as<.'t:rtainable period of time unde r an obligation to

make t he payments in return fo r adeq l.late and full considera tion in money or mo ney's

worth.

(3) Notwithstandinganylhing in this Agreemcnt. any pension or allo wa nce that is

pa id hy onc of the Contracti ng States in reSjY:ct of wounds. disabili ties or dea th cal.lsed

hy war. o r in respect of war service _ a nd is exemp t from tax under the law of tha t State .

toa res ident of the other Contracting Stale shall bcexempt from lax in that o therS late.

ARTI CLE 19

Governmenr Se/vice

Remun~ration. other than a ~n~ionor annuity. paid by on~ of th~ Contract·

(1 )

Il ...

ing Slales or a political sub-di vision or local authority of Ihat Stale 10 a ny individual in

respea of services rendered in the discharge of go'"crnmental funnions shall be taxable

only in that State. Howc\'cr. such remuneration shall be taxable only in the other

Contract ing Stale if the services are rende red in th:n ot her State and th e recipie nt is a

reside nt of that OIhe r State who

(a)

is a ci tizen af that Stale: or

(b) did nOt become a resicknt of Iha t Sta te solely fo r the purpose of perform-

in~ the se rvices.

(2) The provisions o f paragr-aph (1 ) sha ll not apfHV to remunera tion in respect of

services rendered in oonncaion with any trade or business carried on by onc of the

Contracting Sta tes or a political sub-division o r local authority of Ihat S1ale. In such a

case. the provisions of Article 15 or Article 16. as the case may bc. sha ll apply .

(3) Where remun~ration is paid unde r a deve lopment assistance programme of a

Con tract ing State. ou t of funds el(clusive ly supplied by tha t State. to a specialist or

volun tee r seconded to the o ther Contracting Sta te with the con~nt of that other State.

such remunera tion sha ll be deemed to have been paid by the first-mentioned State and

sh all be taxable o nly in that State.

ARTI C LE 20

Shldems

Where a Sllldent . who is a resident o f one of the Cont racting States or who ~"s a

resident of that State immedia tely before visi ting the o ther Contracting Sta te and who is

temporarily pre~n t in that other State solely for the purpose o f his education at a

university, college. school or other similar e duca tion al instillltion. reech 'es paymen ts

from sources outside Ihat ot her Slale for the purpose of hi s mainte nance or education.

tho~ paymen ts shall he e ~ empl from tal( in thal ot her State.

A RTI C LE 21

In come NOI Expressly M ,.mioned

( I) Items of income of a resident o f one of the Contracting SHlles which are not

e xpressly ment io ned in the foregoing Articles of this Agreement shall be taxable only in

that Sta te.

(2) Howeve r, a ny suc h income de ri\'ed by a resident of one of the Comraeli ng

States. from sources in Ihe other Contracting Stale. may also be laxed in that other

Slal e.

(3 ) Th e p rovISions o f paragraph (I) shall nol ap ply to income derived by a

reSident of onc o f Ihe Con tracting Slates where that income is effeeti \'dy conncr ted

with a pennanent esta bl ishmen t or fix ed ba~ si tuat ed in the ot her Contracting State. In

~\leh a case. the provisions of Artkle 7 or Art icle 14 . as the caS{" may be . shall app ly.

ARTICLE22

Sources of In come

Income derived by a resident of onc of the Contracting States which. under anyone

or more of Arti cles 6 to 8. Articles 10 to 19 a nd Article 21. may be taxed in the othcr

Contracting State shall . for the purposes of Article 23 and of the income tax law of that

ot her State. oc deemed to oc inc.ome from sources in that other State.

CHAPT ER IV

Methods of Elimination of Double Taxation

ARTICLE 23

(I) Subject to the provisions of the la w of Australia from time to tim e in force

which relate to the allowance of a credi t agai nst Australian tax of tax paid in a cou ntry

outside Australia (which shall not affect the general principle hereof). Malta tax paid

unde r the law of Malt a and in accordance with this Agreement. wh et her directly or by

deduction. in respect of income de ri ved by a person who is a resident of Australia from

sou rces in Malta (no t includ ing. in the case of a divi dend. tax paid in respect o f the

profits out of whi ch the dividend is paid) shall oc allowed as a credit against Aust rali an

tax payahle in rcs[>C(:t ofthat income.

(2) A company which is a resident of Australia is. in attord,mce with the provi-

sio ns of the ta-xalion la w of Australia in force at the date of signature of this Agrcement.

entitled to a re bate m its assessme nt at the ave rage rate of tax payable by the compa ny in

rcspect of dividcnds that lIre included in its taxable in come and arc received from a

company whic h is a resident of Malta. However. should the law so in force be amended

so that the rebate in relation to th e dividends ceases ( 0 be allowable under that law.

Austral ia shall immediately advise Mal ta of the change and en ter into negotialions wilh

Malta in order 10 establish new provisions concerning the credit to be aHowed by

Au st ralia agains t ils tax on th e dividends.

For the purposes ofp;,ragraph (I) and of the in~'Ome tax law of Australia

(3)

(a) a resident of Australia deriving income from sources in M a h ~ consisting

of dividends to whi ch sub-paragraph (2) (b) (ii ) of Article 10 applies. interest to

which Article 11 1lpplies o r royalties to which Article 12 applies. being income in

respecl of which Malta tax has been wholly relieved or reduced for a li mi ted period

of time under th e provisions of the Aids to Indust ries Ordinance 1959. so far as they

were in force on. and have not been modified since. the date of signature of this

Agreement. o r have been mod ifi ed only in minor respects so as not to affect their

general character. or under any other provisions which may subsequently be

agret.:d by the Contracting State, in letters exchanged for the purpose thro ugh the

diplomatic channel to be of a substantially similar character. shall be deemed \('I

have paid Malta tax in an amount. or the Malta tax paid shall be deemed to have

hcen increascd by an amount. equal to the amount by " .. hich the Malta tax that

otherwise wou ld have been payable (which t;ox . in the case of dividends. shall not

e xceed 15 per cent and. in th e case of royalties or interest . 10 per cen t of the gross

amount thereof) is reduced by the exemption or reduction granted: and

(b ) the amount ofttJ.c said dividends. inte reslsor royalties shall be dcemed to

be the amount thilt would hllvC Ix'en the amount of the dividends. intercst or

royaltie~ tf no Malta tax had been paid. increascd by the amount by whic:h the tax

B

that ot herwise ",ould have been payable is reduced by the said exemption or

reduction.

(4) Paragrap h (3) shall not apply in relation to income derived in any year of

income after the year of income that ends o n 30 JUll e 1989 or on any later date th~t m~y

be agreed by the Contrileting States in letter> exehilnged for this purpose.

(5) (a) Subject to the provisions of the la", of Malta from time to time in force

which re late to the allowance of a credit against Malta ta~ of tax paid in a country

outside Malta (which shall not affed the ge neral principle hereof). Australian t a~

paid unde r th e law of Australia and in a.::oordan.::e ",ith this Agree ment. wheth er

directly o r by dedudion. in respe.::t of in.::ome de rived by a person who is a resident

of Malta from sources in Australia (not including. in the C'dse of a dividend. ta~ paid

in respect of the profi ts ou t of wh ich th e divide nd is paid) shall be allo w.::d as a credit

against Malt a tax payable in respect of Ihat income.

(b) Where a company whi.::h is a r.::side nt of Australia pays a dividend to a

compa ny which is a resident of Malta and "'hi.::h controls d,redly or indirectly at

leas t 10 per cen t of the vo ting power in the fi rst- ment ioned oompany , the credit

shall take into account (in addition to ,lilY Australi~," ta x for which credit may be

allowed under sub-paragraph (a) ) the Australian tax payable by that fim ·men-

tioned company in resped of the profits o ut of which sueh dividend is paid .

(6) Where under thi s Agrecment income is to be relieved from tax in one of the

Contracting States and_ under the law in force in th e other Contracting State a person.

in respe.::t of the said income, is subject to tax by reference to the amount thereof ""hich

is remitted to or received in that other State and not by reference to Ihe full ilmou nt

th ereof. then th e relief 10 be allo wed under this Agreement in the first-mentioned State

s hall applyOhly to so much ofth e income as is remitt ed toorreceived in the other State.

CHAPTER V

ARTI C LE 14

All/trial Agreemem PrQcedl/re

(I) Where il resident of one oflhe Contrading States.::onsiders that the aetio nsot

the compe tent au thority of une or both of the Contracting States result or will result for

him in taxation not in accordance with this Agreement. he may. notwithstanding the

remedies provided by the national laws of those States, present his case 10 the compe-

tent authority of the Contracting State of which he is a resident. The case must be

presented within three years from the first notification of the action giving risc to

taxation not in accordance with this Agreement.

(2) 111e compelent authori ty sha ll endeavour. if the claim appears to it to be

justified a nd if it is not itself 3ble to 3rrive 31 an appropriate solution , to resolve the .::ase

wi th the competen t authori ty of the othe r Con trading State. with a view to the

avoidance of taxation not in accordance with this Agreement . A ny solution so reached

sha ll be impl emented notwithstanding any time limits in the national laws of the Co n-

tracting States.

(3) The competen t authorities of the Contractin g Stales shall jnintly endeavour

10 resolve any difficulties or doubls arising as to the interpretatiun or ap plicat ion of this

Agreement.

(4) Th e com peten t authorit ies of the Contracting States m~y communicate wi th

eaeh ot her dired ly for the purpose of giving effect to the provision of th is Agreement.

A RTIC LE 25

Exchange of Injonnarion

The competent authorities o f the Con tracting States shall exchange such

(I)

information as is necessary for the carrying out o f this Agreement o r of the domestic

laws of the Cont racting States concerning the taxes to which this Agreement ap plies

insofar as thc taxation thereunder l~ not contrary to this Agrecment. Thc exchangc of

infonnation is not restricted by A rticle I. Any information received by the compe tcnt

a uthority of a Contracting Sta te shall be treated as secret in the same mann<!r as

information obtaincd under the domestic laws of that State and shall be disclosed only

10 persons or authorities (including courts and administrative bodies) concerned with

the assessme n t or collection of. enforcement aT pTosecution in TespeCt of. or the

detennination of appeals in relation 10. the taxes 10 which this AgTeemen t applies and

~hall be u~cd only fOf ~uch pmpo~e~.

In no case shall the provisions of paragraph (I) be construed so a:; to impose

(2)

on a C o ntracting State the obligation

(a) to carry out administrative measures a t varia nce with thc laws or the

adm in ist rative practice of th al or of t he other Contra(1ing State

(b) to supply particulars which are not obtainable under the laws or in the

normal course of the administra tion of tha l a T of the other Contracting State;

(c) to supply information which wou ld disclose any tTade. business. indus-

triaL commercial or professional secret or trade process. or 10 supply information

the disclosure of which would be contrary to p ublic policy .

ARTIC LE 26

Diplom(1tic ""d C<HIS"lur O/fidu/'"

(I) Nothing in this Agreement shall affect the fiscal privileges of dip lomatic or

consular officials under the genera l rules of internationa l law or under the provisions of

special inlernalional agreements.

(2) Notwi thstanding Article 4. an individual who is a member of a diplomatic

mission. consular post or permanent mission of one of the Contracting Stales wh ich is

situatcd in thc other Contracting Statc or in a third St3te shall be deemed [or the

purposes of this Agreement to be a resident of the sending state if he is liable in the

sendi ng Sta te to the same obligations in relation 10 ta~ on his total income as are

residents of that sending Slale .

(3) This Agreement shall not apply to Inlernational Organizations. to orgllns or

officials thereof or 10 persons who ar.! members of a diplomatic mission, consular post

or permanent mission of II third State. being present in a Contracting State and who arc

not li~b!e in eitheT Contracting State 10 the S..lmc obligations in relation to tax on their

total income a~ are re~idellts thereof.

B

3]2

CHAPTER VI

Final l'rovisions

ARTICLE 27

Entry into Force

This Agreement shall enter into force on the date on which the Contracting States

exch;:mge notes through the diplomatic channel notifying each other that the la~t of ~uch

things has been done as is necessary to give this Agrcement thc force of law in Australia

and in Malta. as the case may be, and the reuJXln this Agreement shall have effect

(a)

in Australia

(i) in respect of WIthholding tax on income that is derived by a non -

reside nt. in relation to income derived un or after I January in the ea]endar

year next following that in which the Agreement enters into force;

(ii ) in respect of other Australian tax , in relation to income of any year

of income beginning on or after I July in the calendar year next following tha t

in which the Agreement enters into force;

(b)

in Malta

in relation to taxes which are levied for the )'ear of assessment beginning

on I January in the second calendar year following that in which the

Agreement ente rs in tu force and for any subsequent year of assessment.

ARTICLE 28

Termin(llim,

T his Agrecment shall conti nue in effect indefinitely. but either of the CuntT'dcting

States may. on or before.30 Jun e in any calendJ r year beginning after the expiration of 5

yellrs fmm the date of its entry intu furee. give to the o ther ContTllcting State through the

diplomatic ehllnoel written notice of termination and. in that event. this Agreement

s hall cease to be effective

in Al1~tralia

(a)

(i) in respect of withholding tax on income that is derived by a non·

resident. in relation to income derived on or after I January in the calendar

year ne;.;! fullowing that in wh ich the notice of termination is given;

(ii) in respect of othe r Australian ta;.;. in relation to income of any yeM

of income beginning on or after I J uly in the calendar year next followlOg that

in which the notice of termination is gi\'e n;

(b)

in Malta

in relation to taxes which arc levied for the yeM of assessmen t beginning

on I Jnnuary in the >ccond calendar year follo ..... ing that in ..... hich the nmiIT

of terminatiun is given and for s ubsequent years of assessment.

IN W ITNESS WHER EOF the undersigned . duly a uth orised th ereto. h,l\'c signed

thi s Agreement.

DONE in duplic<l te ;It Vallelt;l. Mal1ll. this ninth day of I\'\ay onc thousand n]ne

hundred and elght y-foUT in the E nglish bnguage,

FOR MALTA

FOR AUSTR.4.LlA

(sgd.)A. SCIBERRAS TRIGONA

(sgd.) N.ROSS SMITH

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Ka,ri/ja

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